Accidental
Bodily InjuryInjury to the body as the result
of an accident.

Accident
Insurance
Insurance cover of the loss of any limbs
or eyes, etc. in the event of an accident.
It also generally covers compensation to
the policyholders dependents in the
event of death.

Accord
and Satisfaction
When one party has discharged its obligations
under a contract, it may elect to release
the other party from its obligations. When
this is done in return for a new consideration,
the release is known as accord and satisfaction.

Act
of God
Event caused by nature that is so unpredictable
as to be unavoidable, for example, the timing
and location of earthquakes or floods. Acts
of God are normally insured against as a
matter of course.

Actuary
A person professionally trained in the technical
aspects of pensions, insurance and related
fields. The actuary estimates how much money
must be contributed to an insurance pension
fund in order to provide future funds.

Actual
Total Loss
Insured item that has been lost or completely
destroyed. The full insured value is payable
by the insurer.

Additional
Insured
An assured party specifically named under
an insurance policy that is not automatically
included as an insured under the policy
of another, but whom the named insureds
policy provides a certain degree of protection.
(e.g. bankers or financial institutions)

Adjuster
(US: adjustor)
Person who calculates losses in insurance
claims, also called a loss adjuster.

Affreightment
Carriage of goods by sea.

Agent
An insurance company representativelicensed
by the IRDA negotiates or effects contracts
of insurance, and provides service to the
policyholder for the insurer.

All-Risks
Policy
Insurance policy that covers personal possessions
against loss or damage, usually anywhere
in the country. All-risks policies are frequently
extended to cover possessions in other parts
of the world, and are therefore often used
to insure small moveable items. Despite
the term all-risks, there is
usually some important exclusion.

Arbitration
A form of alternative dispute resolution
where an unbiased person or panel renders
an opinion as to responsibility for or extent
of a loss.

Arson
The willful and malicious burning of, or
attempt to burn, any structure or other
property, often with criminal or fraudulent
intent.

Assignment
Legal transfer of a property, right or obligation
from one party to another.

Assurance
Insurance that provides for an event that
will certainly happen (such as death), as
opposed to an event that may happen. There
are many types of assurance policies such
as endowment assurance, life assurance,
and so on.

Assured
Person who receives the proceeds of an assurance
policy when the policy matures or the person
assured dies.

Average
Adjuster
Person who calculates the loss: how much
money is to be paid on an insurance claim.

Average
Clause (Condition of average)
In marine and commercial insurance and some
fire insurance policies, a clause in the
policy that stipulates certain items shall
be subject to average if there is underinsurance.

B

Bailee
Person to whom goods are entrusted for safe
keeping.

Bailment
Act of placing goods into the care (but
not possession) of someone else. The person
who places the goods is the bailor and must
be the rightful owner. The bailee is the
person who receives the goods.

Bailor
Person who leaves goods with somebody (the
bailee) for safe keeping.

Bancassurance
Involvement of banks in the traditional
insurance market.

Barranty
of the Master
An action of the master of the ship which
violates the trust given to him provided
such action is not taken in connivance with
the shipowner.

Bill
of Lading
Document detailing the transfer of goods
from a (foreign) supplier to a buyer. It
may be used as a document of title.

BIMCO
The Baltic and International Maritime Council
(BIMCO) is based in Copenhagen and has been
in operation since 1905. It is a group of
ship owners, brokers, agents, clubs and
others interested in carriage by sea and
unites them in promoting proper shipping
practices and in opposing objectionable
and unfair import charges, claims, etc.

Blanket
Insurance
A policy designed to provide coverage under
a single limit for two or more items (e.g.
building and/or contents), two or more locations,
or a combination of items and/or locations.

Bottomry
A primitive form of ship mortgage, whereby
the master, while away from the ships
home port, by signing a bottomry bond,
borrowed money on the credit of the vessel
to pay for goods or services needed to preserve
the ship or complete the voyage. The creditors
security was extinguished, however, if the
ship was lost or destroyed.

Break
Bulk
Carriage of goods other than by container.

BrokerA marketing specialist who represents
buyers of insurance and who deals with companies
in arranging for the coverage required by
the customer. He should be a license holder,
issued by IRDA.

BurglaryBreaking and entering into other
persons property with felonious intent.

Business
Interruption Insurance (BI insurance)
Insurance that provides compensation for
the policy holder if his or her business
activities are interrupted by a mishap such
as a fire. The amount insured covers loss
of net profits, fixed costs and any additional
expenses incurred. The policy is subject
to a material damage warranty, i.e. a claim
for matching damage must have been paid
for the BI cover to be effected. It is also
known as consequential loss insurance.

C

Cancellation
The discontinuance of an insurance policy
before its normal expiration date, either
by the insured or the company.

Captive
Insurance Company
A companyowned solely or in large part by
one or more non-insurance entities for the
primary purpose of providing insurance coverage
to the owner or owners.

Cargo
Insurance
It is a type of Transit insurance designed
to protect the shipper of the goods against
financial loss if the goods are damaged
or lost.

Cash
against Document (CAD)
Method of payment for goods for export,
whereby the documentation for a shipment
is sent to an agent or bank at the destination.
These are passed to the consignee, who makes
the payment. The consignee is free to take
delivery of the shipment when it arrives.

Catastrophe
Cover
Type of reinsurance on an excess of loss
basis to protect against an accumulation
of losses arising from one event.

Catastrophe
Risk
In insurance, an exceptional loss for example,
resulting from a flood or earthquake.

Caveat
Emptor
Latin for buyer beware. In legal
terms this maxim means that a buyer of goods
should use his or her own common sense,
and that the law is not prepared to aid
someone who buys goods foolishly.

Certificate
of Insurance
A statement of coverage issued to an individual
It is a proof of insurance. Generally, it
is issued for Motor and Marine insurances.

Certificate
of Motor Insurance
Document that confirms the existence of
a valid motor insurance policy. It must
state the name of the policyholder, the
registration number of the vehicle, dates
of commencement and expiry of the insurance,
the person or persons insured to drive the
vehicle, and any limitations on use. The
form should be as per Motor Vehicles Act,1
988.

Cession
Amount of the insurance ceded to a reinsurer
by the original insuring company in a reinsurance
operation.

Claim
Request for payment to an insurance company
in respect of loss or damage covered by
an insurance policy, usually submitted by
filling in a claim form.

Claims-Made
Policy
Insurance policy in which the insurer must
meet only claims made during the time cover
is provided (irrespective of when the loss
occurred).

Coinsurance
Method of sharing insurance risk between
several insurers. The policyholder will
deal as a lead insurer who issues documents
and collects premiums. The policy will detail
the shares held by each company.

Commission
The part of an insurance premium paid by
the insurer to an agent or broker for his
services in procuring and servicing the
insurance.

Concealment
Deliberate failure of an applicant for insurance
to reveal a material fact to the insurer.

Conditions
Provisions inserted in an insurance contract
that qualify or place limitations on the
insurers promise to perform.

Consequential
Loss
Financial loss occurring as the consequence
of some other loss. Often called an indirect
loss. Consequential loss or damage is indirect
loss or damage caused by a covered peril
such as fire.

Consideration
In some forms of contract, the agreement
is made binding by the payment of a sum
of money from one party to the other. Such
a payment is known as a consideration. The
term is also used informally to mean any
form of payment.

Consignment
Shipment of goods sent to someone for example,
an agent, usually so that he or she may
sell them for the consignor.

Contract
A binding agreement between two or more
parties for the doing or not doing of certain
things. A contract of insurance is embodied
in a written document called the policy.

Contractual
Liability
Legal Liability of another party that the
business firm agrees to assume by a written
or oral contract. It is common in construction
and other agreements (written and oral)
for one party to assume the liability of
another. This is sometimes referred to as
a hold harmless agreement. The extent to
which one holds another harmless varies
from contract to contract, job to job and
so on.

Contractors
All Risks
Type of insurance that provides compensation
to a contractor in the event of damage to
construction works from a wide range of
perils.

Contra
Proferentem Rule
Nickname for the following Latin maxim:
verba chartarum fortuis accipiuntur contra
proferentem  meaning the words of
the contract are construed more strictly
against the person drafting them. In effect,
the contra proferentum rule meas that if
a contract is ambiguous, it will be construed
in a way that is the least advantageous
to the party that drew up the contract.

Contribution
It is a term insurance in which a risk has
been insured twice over, and each insurance
company shares the costs of a claim payment.

Contributory
Negligence
Lack of care in looking after something
that reduces the value of damages or an
insurance payment in the event of a claim
being made.

Cover
Note
Document issued by an insurance company
giving cover for a short time, often one
month, while a complete policy (and, possibly,
an insurance certificate) is drawn up and
issued.

Cross
Liability Endorsement
In the event of claim by one insured for
which another insured covered by the same
policy may be held liable, this endorsement
covers the insured against whom the claim
is made in the same manner as if separate
policies had been issued. However, it does
not operate to increase the insurance companys
overall limit of liability.

Co-insurance
Method of sharing insurance risk between
several insurers. The policyholder will
deal as a lead insurer who issues documents
and collects premiums. The policy will detail
the shares held by each company.

D

Damaged Arrived
value
It refers to the market value of the goods
in damaged condition.

Debris
Removal Clause
The clause extends insurance coverage to
include the cost of debris removal resulting
from damage caused by a covered loss up
to a specified limit of loss.

Deductible
An amount which a policyholder agrees to
pay, per claim or per accident, towards
the total amount of an insured loss.- (Excess)

Depreciation
A decrease in the value of property over
a period of time due to wear and tear or
adolescence. Depreciation is used to determine
the actual cash value of property at time
of loss.

Directors
and Officers (D & O) Liability
Insurance
Type of insurance that provides a companys
directors and officers with cover against
losses incurred through misleading statements
or negligence.

Duty
of Disclosure
Positive duty to disclose material facts
in an insurance proposal.

Dynamic
Risk
Any insurance risk resulting from a human
decision.

E

Earned
Premium
For an insurance policy, the part of the premium
that relates to an expired period of cover.

Electronic
Data Interchange (EDI)
Method by which companies or people communicate
with their banks, clients and suppliers
using computers.

Embezzelment
Fraudulent use or taking of anothers
property or money which has been entrusted
to ones care.

Errors
and Omissions Insurance (E & O insurance)
Insurance that covers liability for errors
and omissions, such as incorrect records
or accounting.

Estimated
Maximum Loss (EML)
Used in fire, explosion and material damage
insurance policies, it is an estimate of
the monetary loss that could be sustained
on a single risk as a result of a single
peril, which is considered by the underwriter
to be possible.

Estoppel
Legal restrictions on a persons actions.
The law insists that a person must bear
liability for previous actions. Estoppel
is generally used to prevent a denial of
responsibility, for example, the parties
to a contract cannot subsequently claim
that they were unaware of its conditions.

Excess
Sum that a policyholder has (by agreement)
to contribute to an insurance claim, for
example, on a motor insurance the policyholder
may have to pay the first Rs. 500 or Rs.
1000(the excess) on any claim. It may be
compulsory or voluntary.

Excess
of Loss
In reinsurance, an agreement that requires
the reinsurer to bear any loss over a certain
stated amount.

Exchange
Gain
Profit made by an importer if there is an
favorable change in the exchange rate.

Exchange
Loss
Loss made by an importer if there is an
unfavorable change in the exchange rate.

Expense
Ratio
The ratio of a companys operating
expenses including acquisition costs to
premiums written or earned.

Extended
Reporting Period Endorsement
Added to a claims-made policy of liability
insurance to provide the original amount
of insurance for a limited period of time.

Exgratia
Payment
In insurance, a payment made to settle an
issue (such as an insurance claim) but without
admitting liability.

F

Facultative
Type of reinsurance in which risks are coded
on an individual basis. The coding company
can choose whether or not to reinsure and
the reinsurer can decide to accept or reject
the business.

FIA
Abbreviation of Fellow of the Institute
of Actuaries.

Fidelity
Guarantee Insurance
Commercial insurance that covers misappropriation
of funds or other wrongdoing by an employee.
It is also called fidelity insurance.

Fidelity
Policy
A form of protection which reimburses an
employer for losses caused by dishonest
or fraudulent acts of employees.

Fiduciary
A person who holds something in trust for
another.

Fire
A combustionaccompanied by a flame or glow,
which escapes its normal confines to cause
damage.

First
Loss Insurance
Type of fire insurance or theft insurance
in which the full value of the insured item
is declared, but a lower sum is insured
(at a consequently lower premium).

Fleet
Insurance
Motor insurance policy that covers a group
of vehicles from one organization.

Fortuitous
Loss
Unforeseen and unexpected loss that occurs
as a result of chance.

Franchise
In insurance, a franchise is an agreed figure
below which an insurance company does not
have to meet a claim. A loss above the franchise
figure is paid in full.

Fronting
In insurance, selling certain products with
the intention of passing them on to another
company.

G

General Average
In insurance, a situation in which a loss,
resulting from a deliberate act of sacrifice
to save other goods, is shared by the insurers
concerned (such as the insurer of a vessel
and the insurer of its cargo where part of
the cargo has been jettisoned  and lost
 to save the ship).

Glass
Insurance
Protection for loss of or damage to glass
and its appurtenances.

Gross
Negligence
The intentional failure to perform a manifest
duty in reckless disregard of the consequences
as affecting the life or property of another.

Group Insurance
Insurance written on a number of people
under a single master policy, issued to
their employer or to an association with
which they are affiliated.

H

Hazard
Condition that creates or increases the
chance of loss.

Hull Insurance
Insurance of a vessel and its machinery.
A policy is generally taken out during construction
which covers the ship for the whole of its
useful life. Most hull insurances provide
cover against accidents caused by the negligence
of crew or stevedores.

I

Implied
Warranty
In marine insurance, warranty that a vessel
is seaworthy and its voyage lawful (not explicitly
written into the contract).

Incurred
Losses
Expense account in an insurance companys
income statement reflecting the claims paid
during the policy year plus the loss reserves
as of the end of the policy year, minus
the corresponding reserves as of the beginning
of the policy year.

Incurred-But-Not
Reported Reserves(IBNR)
Liability account on an insurers balance
sheet reflecting claims that are expected
based upon statistical projections but which
have not yet been reported to the insurer.

Indemnification
Compensation to thevictim of a loss, in
whole or in part, by payment , repair or
replacement.

Indemnity
Legal principle that specifies an insured
should not collect more than the actual
cash value of a loss but should be restored
to approximately the same financial position
that existed before the loss.

Insurable
Interest
Financial interest, recognized at law, which
the insured has in the subject matter of
insurance. In some cases, an unlimited insurable
interest exists, for example, in ones
own life and the life of a spouse. However,
in most cases, insurable interest is limited
to the value of the property or goods, or
extent of liability.

Insurable
Risk
Risk against which insurance cover can be
obtained by somebody with an insurable interest
in it.

Insurance
Contract under which the insurer agrees
to provide compensation to the insured in
the event of a specified occurrence, for
example, loss of or damage to property.
In return, the insured pays the insurer
a premium, usually at fixed intervals. The
premium varies according to the insurers
estimate of the probability that the event
insured against will actually take place
(a calculation carried out by an actuary).

Insured
Person or company that holds an insurance
policy (a contract with an insurance company);
a policyholder.

Insured
Peril
Peril that is specifically stated in an
insurance policy as being coverd or included.

Insurer
Insurance company or other person or company
that agrees to indemnify someone against
particular risks, usually as defined in
an insurance policy and for an insurance
premium.

Insuring
Agreement
That part of an insurance contract which
sets forth the type of loss being covered
by the policy and the parties of the insurance
contract.

Insuring
Clause
The clause in an insurance contract which
sets forth the type of loss being covered
by the policy and the parties of the insurance
contract.

Intangible
Assets
They are abstract commodities, which cannot
be seen or perceived through the senses,
for e.g., goodwill, honesty, integrity,
etc.

J

Jettison
Hazard covered under a marine cargo policy
which is defined as the throwing overboard
of cargo to preserve property from loss.

Jewelers
Block Insurance
Coverage designed to protect the insured
stock, property left with the insured for
repair or other purposes, and the insureds
interest in and legal liability for property
on consignment from others in the jewelry
trade.

Joint- and
 Several Liability
a legal principle that permits the injured
party in a tort action to recover the entire
amount of compensation due for injuries
from any defendant who is able to pay, regardless
of the degree of that partys negligence,
once any liability by that defendent has
been established.

K

Key Person
Insurance
Insurance to cover the health of an essential
employee (a key person) in a company. This
form of insurance covers the cost of replacing
such personnel at short notice by equally
qualified temporary staff and any loss of
profits incurred in the meantime.

Knock 
for  Knock Agreement
In motor insurance, agreement between a
group of insurers that no question of responsibility
will be discussed and that each company
will pay for damage to its own policyholders
vehicles, so long as the policyholder is
covered for such damage.

L

Lapse
The termination or discontinuance of an insurance
policy due to non-payment of a premium.

Law
of Large Numbers
Concept that the greater the number of exposures,
the more closely will actual results approach
the probable results expected from an infinite
number of exposures.

Liability
Any legally enforceable obligation.

Liabilities
Portion of an insurers balance sheet
which denotes legal obligations of the company,
including anticipated future payments of
losses covered under policies issued.

Liability
Insurance
Insurance designed to protect the policyholders
from financial loss due to liability resulting
from injuries to other persons or damage
to their property.

Lien
The right to possession of property until
such time that an outstanding liability
has been repaid.

Lloyds
of London
Incorporated association of insurers that
specializes in marine insurance. Formally,
established by Act of Parliament in 1871,
the Corporation developed from a group of
17th  century underwriters who met
at Edward Lloyds coffee house in London.
Lloyds supervises about 20,000 individual
insurers (names) grouped into
syndicates, each of which has unlimited
liability and accepts a fraction of the
risk of business brought to them by one
of more than 200 registered brokers. Lloyds
involvement in marine insurance currently
comprises less than half the total business
transacted by Lloyds underwriters.
From 1988 to 1994, Lloyds lost over
8 billion pound Sterling and many names
went bankrupt. As a result limited liability
companies are now allowed to become corporate
names.

Loading
The amount that must be added to the pure
premium for expenses, profit and a margin
for contingencies.

Loss
The occurrence of an event for which insurance
pays.

Loss
avoidance
A risk management technique whereby a situation
or activity may result in a loss for a firm
is avoided or abandoned.

Loss
control
Any conscious action intended to reduce
the frequency, severity, or unpredictability
of accident losse.

LossofProfits
Insurance
Type of insurance that provides cover against
loss of trade and profits resulting from
some disaster such as a fire. In the latter
case the policy would typically pay a business
the equivalent of the expected net profits
lost while repair work and restocking were
carried out, plus salaries, rates and rent
due in that period. Fire damage itself will
probably be covered by a separate fire insurance.
A loss-of-profits policy is sometimes also
called a business-interruption policy.

Loss
Payable Clause
Means of protecting a mortgagees interest
in property by directing the insurer to
make a loss payment to the mortgagee in
the event of a loss.

Loss
Prevention
Any measure which reduces the probability
or frequency of a particular loss but does
not eliminate completely all possibility
of that loss.

Loss
Ratio
In insurance, the value of all claims expressed
as a percentage of total premium for a period.
The figure is used as a guide to the profitability
of the business when considering rates.

Loss Reserve
The amount set up as the estimated cost
of a claim.

M

Marine Insurance
Insurance of ships and their cargoes which
provides indemnity for property loss, damage
and injury to third parties. Marine losses
arise in four areas:
Hull  damage to or loss of vessel.
Cargo  goods that have been sold and
are being shipped to the buyer.
Freight  the cost of transporting cargo.
Liability  damage or injury to third
parties.

Misrepresentation
A false, incorrect, improper, or incomplete
statement of a material fact, made in the
application for an insurance policy.

Moral
Hazard
Hazard arising from any nonphysical, personal
characteristic of a risk that increases
the possibility of loss or may intensify
the severity of loss, for instance, bad
habits, low integrity, poor financial standing.

Mutual Insurance
Company
An insurance company in which ownership
and control is vested in the policyholders
and a portion of surplus earnings may return
to policyholders in the form of dividends.

N

Named Perils
Coverage in a property policy that provides
protection against loss from only perils specifically
listed in the policy.

Negligence
Failure to use the care that a reasonable
and prudent person would have used under
the same or similar circumstances.

O

Occupational
Hazard
Occupations which expose the insured to greater
than normal physical danger by the very nature
of the work in which the insured is engaged
and the varying periods of absence from occupation,
due to the disability, that can be expected.

Occurrence
An accident, including continuous or repeated
exposure to substantially the same general,
harmful conditions, that results in bodily
injury or property damage during the period
of an insurance policy.

Overriding
Commission
In reinsurance, commission paid to the ceding
company which is more than the acquisition
cost to allow for additional expenses.

P
& I Clubs
Protection and Indemnity Associations. These
are associations of shipowners organized
to provide mutual aid for members for liabilities
not covered by marine hull policies. Each
shipowner contributes to the fund on a tonnage
basis but could be called upon to make further
contributions if claims in a year are heavy.

Peril
In insurance, any event that causes a loss
and which may be included or excluded on
an insurance policy, for example, an insured
peril in a fire policy is fire; an excluded
peril is war.

Peril
of Nature
In insurance, a class of peril that includes
earthquake, flood, hailstones, storm, thunderbolt
and subsidence; such perils are usually
covered by property insurance.

Peril
of the Sea
All perils which are unique of transportation
and which could not be prevented by reasonable
efforts, including sinking of the vessel,
standing, heavy weather, lightening, collision
with other vessels or submerged objects
and damage by sea water when caused by an
insured peril.

Personal
Lines
Those types of insurance such as auto or
home insurance, for individuals or families
rather than for business or organizations.

Physical
Damage
Damage to or lossof the auto resulting from
collision, fire, theft or other perils.

Policy
The legal document issued by an insurance
company to a policyholder, which outlines
the conditions and terms of the insurance,
also called the policy contract or the contract.

Policyholder
A person who pays a premium to an insurance
company in exchange for the insurance protection
provided by a policy of insurance.

Pollution
Liability
Exposure to lawsuits for injury or cleanup
costs that result from pollution damage.

Pool
An organization of insurers or reinsurers
through which particular types of risk are
underwritten and premiums, losses and expenses
are shared in agreed upon amounts.

Portability
The right to transfer pension rights and
credits when a worker changes jobs.

Premium
The sum paid by a policyholder to keep an
insurance policy in force.

Probate
The court supervised process of validating
or establishing a distribution for assets
of a deceased including the payment of outstanding
obligations.

Product
Liability
Legal liability incurred by a manufacturer,
merchant, or distributor because of injury
or damage resulting from the use of its
product.

Product
Liability Insurance
Coverage designed to provide protection
against financial loss arising out of the
legal liability incurred by a manufacturer,
merchant, or distributor because of injury
or damage resulting from the use of covered
product.

Proof
of Loss
Documentary evidence required by an insurer
to prove a valid claim exists. It usually
consists of a claim form completed by the
insured, and for health insurance claims
by the insureds attending physician.
For medical expense insurance itemized bills
must also be included.

Proposal
Form filled in by a person wanting to take
out insurance. Inaccuracies or omissions
(accidental or deliberate) in a proposal
may invalidate any insurance policy issued.

Proposer
Individual or company offering or seeking
insurance.

Proximate
Cause
In insurance, the immediate effective cause
of an insured loss. It was defined in the
case of Pawsey v. Scottish Union & National
as the active efficient cause which
sets in motion a train of events, which
brings about a result, without the intervension
of any force, started and working actively
from a new and independent source.

Prudent
Insurer
Hypothetical insurer who is in possession
of all relevant information (material facts)
before issuing an insurance policy.

Pure Risk
In insurance, a risk that can result in
either a break-even situation, or a loss.

Q

R

Risk Avoidance
Any action that removes the chance of an adverse
outcome happening.

Risk
Control
In insurance, measures adopted to minimize
the effect of an insurable risk, either
before or after a loss occurs.

Risk
Reduction
Measures that could reduce the chance of
losses occurring or the size of such losses.
Risk retention insurance: Policy of bearing
a risk because it would cost more to insure
against it than the loss itself.

Risk
Retention Insurance
Policy of bearing a risk because it would
cost more to insure against it than the
loss itself.

Reimbursement
The payment of the expenses actually incurred
as a result of an accident or sickness,
but not to exceed any amounts specified
in the policy.

Reinstatement
The resumption of coverage under a policy
which has lapsed.

Reinsurance
Transfer of an insurance (or part of the
risk covered) from one insurance company
to another for a premium, not necessarily
with the knowledge of the policyholder.

Renewal
Continuance of coverage under a policy beyond
its original term by the insurers
acceptance of the premium for a new policy
term.

Replacement
The substitution of health insurance coverage
from one policy contract to another.

Retention
The net amount of risk retained by an insurance
company for its account or that of specified
others, and not reinsured.

Risk
The chance of loss.

Risk
Control
Any conscious action intended to reduce
the frequency, severity, or predictability
of accidental loses.

Robbery
The taking of property from a person by
force or threat of violence.

S

Salvage
Rescuing people or property from a flood,
fire, shipwreck or other disaster. A person
who salvages goods may be paid compensation
by their owners or insurers. The ownership
of some salvaged goods can be a contentious
issue.

Sight
Bill
Bill of exchange payable on presentation
i.e. on sight.

Slip
Document produced by a broker when insurance
business is placed at Lloyds of London.
It includes such details as the name of
the insured, the starting date and period
of insurance, the property insured and the
period of cover, the premium and commission
payable, and any special conditions or limitations.

Sound
Arrived value
It refers to the market value of the goods
in sound condition.

Stop-Loss
Type of insurance or reinsurance that covers
a whole account over a period of time. No
payment is made until the accumulated losses
in the year exceed the stop-loss level.

Subrogation
Right of an insurer, having indemnified
the insured, to avail himself or herself
of any rights and remedies of the insured,
for example, salvage.

Sum
Insured
Limit of an insurance companys liability
under a particular insurance policy.

Surplus
In reinsurance, it is the amount by which
the sum insured exceeds the ceding offices
retention.

Surveyor
Person whose job is to examine buildings,
etc. and report on their condition, often
employed by an insurance company (for buildings
insurance) or a mortgage provider.

T

Tariff
In insurance, it is a collective agreement
by members to calculate and charge the same
premium for a given risk or type of insurance.

Third
Party
Person mentioned in a contract but not a
party to the contract. Third-party insurance,
for example, gives the insured cover against
claims made by a third party (who is not
named in the policy and not a party to it).

Third
Party Liability
Liability arising to a party, who is not
party to the contract i.e. other than the
insured or the insurer. Thisparty/person
is called the third party and the liability
to him/her arising under law or contract
is called third party liability.

Total
Loss
In marine insurance, the loss of ship at
sea or the total destruction of a ship and/or
its cargo.

Through
Bill of Lading
A bill of lading providing for the carriage
of goods by water, from their point of origin
to their final destination, either by successive
ocean carriers or by more than one mode
of transportation.

Theory of
Probability
This theory enables the insurance company
to predict potential losses based on a study
of the insureds previous loss experiences.

U

Underwriter
Person or institution that agrees to take
up a proportion of the risk of something,
for example, an underwriter may take up the
shares of an issue that are not taken up by
the public, in return for a commission (known
as an underwriting commission). For the issuer,
the underwriter represents the guarantee that
the whole issue will be subscribed.

Underwriting
Process of assessing proposals/risks for
insurance.

Undischarged
Insolvent
The person who has declared insolvency but
not paid off his creditors nor has entered
into any scheme of settlement with them.
He is incapable of entering into any contract.

Unexpired
Risk Reserves
Fund that an insurance company sets up to
cover a shortfall in an insurance companys
unearned premium reserve.

Unvalued
Policy
Insurance policy that has a sum insured
against each item of property, but not acknowledged
by the insurer as true values. In the event
of a claim, the insured must prove the actual
value of the item.

Utmost Good
Faith
Phrase referring to contracts of insurance
in which both parties must disclose all
the facts that may influence the others
decision to enter into the contract, whether
they are asked to do so or not. If either
party has not acted in the utmost good faith,
then the contract may become void.

V

Valued Policy
Insurance policy that has values assigned
to insured items, the values being agreed
by the insurer. In the event of a claim for
total loss, that is the sum paid without the
need for further negotiation.

Void Contract
Contract that was drawn up on the basis
of what turns out to be misunderstandings
on both sides. Such a contract is deemed
in law never to have existed.

W

Warranty
In insurance, it is an undertaking by an insured
person that something will, or will not, be
done; for example, that an alarm system will
be maintained and switched on. Breach of warranty
allows an insurer to repudiate claim.

Waybill
(Sea waybill)
A waybill is a non-negotiable receipt issued
after receipt of the goods by the carrier.It
is clearly marked non-negotiable.
It is usually employed in the container
trade for normal shipments with consent
of the shipper who does not insist on being
issued a negotiable bill of lading. It is
not a document of title, so that delivery
of the goods shipped is made, not by presentation
of a document, but by the consignee nominated
on the waybill identifying himself. Only
one original waybill is usually issued to
the shipper. Although it is not a document
of title, it is a contract of carriage.

Wear
and Tear
Popular and legal term for depreciation.
Wear and tear is the decrease in value of
an item due to deterioration through normal
use rather than through accident or negligence.

Work in
Progress In accounting,
the value of goods currently under manufacture
or services being supplied, but not completed
at the end of the accounting period.